As an older civil servant, George had a very tough decision to make recently. After 19 years working as a truck mechanic for the local county where he lives and works in the Northeast, he was given an offer that seemed to be too good to refuse. At age 54, and with the county he works for now in dire financial straits, local officials had put an early retirement offer on the table for senior employees nearing retirement age (55 in this state).

The idea was to provide an incentive bonus to the eligible employees' retirement payments to encourage them to retire earlier than normal. This way, the county would save some money by not replacing the retired employee or having to hire a new employee at a lower salary.

Those eligible must crunch the numbers very carefully, however, since early retirement is not for everyone.

For example an employee who plans to continue working for several more years would find their pension reduced significantly by retiring early, even with the one-time bonus. On the other hand, someone such as George, who intended on retiring soon, might find this offer quite attractive.

When George ran the numbers, it turned out that the difference in his annual pension would be about $4,000 (less) annually, a reduction he felt he could handle rather than the difficult atmosphere he was working under in his fiscally-challenged county.

Decisions such as these are happening all over the country as sagging investment returns for pensions and declining tax revenues continue to have a profound impact on municipal budgets. The wild card in all of these decisions is the long-term viability of the pension systems which are supposed to provide annual income to public employees for life.

Consider this from Reuters News: "The largest 100 [U.S.] public pension funds have around US$1.2 trillion of unfunded liabilities, about $300 billion above the nearly $900 billion they reported themselves, according to a new actuarial released by the actuarial firm Milliman. The pension systems reported a median funding level of 75.1 percent, while the study which uses a different way to value assets and measure liabilities, find an aggregate level of funding of 67.8 percent.

"Both the pension funds' reported results and Milliman's findings fell within the range of previous estimates from other studies of the total size of the public pension shortfall in the United States. With the study, Milliman, stepped into the debate about whether public pensions are underreporting the size of their liabilities..."

Pensions are a hot-button issue -- with taxpayers raising questions about how much (in the end) they will have to contribute to cover future payouts for member benefits. This, all happening while in a time of strained governmental and household budgets. Read more at the source: (Source: Reuters)

The "difference" between taking a job with the county or a private firm for an employee entering the workforce was often the promise by the public sector of payments and benefits in retirement.

Labor unions also negotiated for more generous plans for government employees. As government salaries caught up to many similar positions in the private sector, retirement promises were not usually cut back.

Consider that the larger states have a million or more public employees in their retirement system still working -- and millions more are in the system post-retirement. These system participants vote and shape public opinion. Making adjustments will not be easy.

All of this adds up to a very volatile situation. AC editors monitor news about public pensions in a special Hot Topics Pensions section. Hardly a day goes by without some new development. Here are a few recent excerpts:

Corzine Lawyers: MF Global Lawsuit Makes 'No Sense'(Source: CNBC) Former New Jersey Governor Jon Corzine's lawyers say allegations that he fraudulently ran MF Global Holdings make no sense and that a lawsuit seeking to hold him and others responsible for the futures brokerage's bankruptcy must be thrown out.

Murdoch Hears Critics as His Board Wins Election(Source: New York Times) At the Fox News Corporation Annual Meeting, all of the company's 14 proposed board members were elected, despite the fact that two big California pension funds, Calpers, and the California State Teachers' Retirement System, lodged protest votes by not backing the re-election of the full board.

State asks pension lawsuit be tossed(Source: The Advocate) The Jindal Administration is asking a state district court judge to dismiss a lawsuit challenging the constitutionality of a new 401-K type pension plan for future state employees.

Fueling genocide in Darfur(Source: Alexandria Times)State Legislator Shannon Valentine has introduced a bill that would require the Virginia Retirement System to divest from companies linked to Sudan. VRS owns about $51 million in stock in companies that do business in Sudan, most of which are oil companies.